Record of Advice - Trappitt

Record of advice
September 2022

Presented to
Amy Trappitt



Presented by
Sharon O'Hagan

Mandate

Dear Amy

Thank you for the opportunity to present our review and recommendations to
you which takes your risk profile and return objectives into consideration.

Your two portfolios are currently invested in the following funds:

Discovery Moderate Dynamic Asset Optimiser Fund
Discovery Diversified Income Fund
Discovery Cautious Balanced Fund
Discovery Conservative Dynamic Asset Optimiser Fund of Funds

So as to re-balance the portfolio for future growth and to protect the portfolio
from large swings in volatility, we propose switching the funds into a diverse
range of funds offered by Morningstar.

Your risk profile will increase from the current low risk to a moderate risked
portfolio.

YOUR OBJECTIVES

a portfolio diversified across different asset classes, countries and currencies
a long-term investment horizon in excess of 5 years
long-term growth in excess of inflation
some protection against a volatile Rand, political and economic instability
moderate risk to ensure that the funds grow but are not vulnerable to extreme market movements
a flexible investment term with capital and/or income available as and when required.

The recommended investment strategy is suitable for an investor with a moderate tolerance for risk.

DISCLAIMER

The proposal that follows is dependent on the information received from you. Please determine
whether the advice is appropriate considering your financial objectives and current financial position.

With investments of this nature, there are no guarantees and the only measure of future performance
is to look at the past performance and trust that all variables will remain the same going forward. Past
performance may therefore not be indicative of future results.

Your portfolio value will, from time to time, fluctuate up and down and therefore we cannot guarantee
the investment capital or return of your investment. For this reason, it is important not to measure the
success of your investment over the short- or even medium-term but rather the long-term.

Recommendations

Current Discovery Flexible Investment
Discovery It appears that these funds have been withdrawn in their entirety however we will
Portfolio provide you with our recommendations on the portfolio should you wish to re-invest
at a later stage.

Discovery Living Annuity
We have limited information about this portfolio but will provide our
recommendations based on the funds into which the portfolio is invested.

Choice of funds
Your portfolios consisted of the following funds:

Discovery Moderate Dynamic Asset Optimiser Fund of Funds
Discovery Diversified Income Fund
Discovery Cautious Balanced Fund
Discovery Conservative Dynamic Asset Optimiser Fund of Funds

Discovery utilizes their own funds when investing irrespective of whether they are
suitable to the investor or whether the funds are performing well in comparison to
their peers. This is not unique to Discovery as the majority of large corporates invest
in their own funds so that they are able to charge fees for the management of the
funds and a further fee for the administration of the portfolio.

Fees
Upfront fees were charged on the portfolio. The legislative maximum permissible is
3.45% upfront. Because you withdrew the portfolio within the first five years,
penalties were charged on the portfolio or will be charged on your remaining funds
with Discovery until the full fee is recovered.

Your financial advisor is permitted to charge fees on the portfolio. The legislative
maximum amount is 1.725% per annum. It appears that a fee of 0,75% is being
charged however this was not confirmed.

Discovery is permitted to charge administration fees for housing the funds on their
specialist platform. It appears that a fee of 0,5% is being charged however this was
not confirmed.

Fund performance
The key points of the Discovery funds are as follows however feel free to peruse the
fund fact sheets for details of the fund’s performance and management.

The portfolio overall
Markets have been disastrous since January 2022 and we are currently in a bear
market with talk of recession looming globally. All assets classes have returned poor
returns in the short-term however this is no excuse for returns in the long-term to be
muted. Your current portfolio's returns have not matched or preferably out-
performed inflation which is currently 7.8%. This means that the buying power of
your money has declined and as such you are losing value.

Proposal We propose that the living annuity is transferred without delay to Ninety One where
the funds are invested in a balanced portfolio with exposure to onshore and offshore
shares balanced across different fund managers and asset classes.

We propose investment into the Morningstar Adventurous Fund which has had the
the following historical returns:

The portfolio is balanced and diversified across various fund managers and not just
one fund manager:

The portfolio is balanced across different asset classes onshore and offshore.

The advantages to switching the portfolio are as follows:
The portfolio has a significant portion invested offshore thereby hedging against
Rand weakness and political tumult.

Although the risk of the portfolio will be increase from the current low risk to our
proposed moderate risk, we believe that the returns justify the increase in risk.
We are of the opinion that having all of your funds in South Africa is more risky
than investing offshore in different countries, in different currencies and in
different asset classes.

The greatest motivator to re-investing the portfolio is to out-perform inflation
which is slowly devaluing the value of your portfolio. The unofficial inflation rate
is far higher than what the official inflation is which must be guarded against so
as ensure longevity of your funds for many years to come.

The costs of the proposed portfolio are seemingly cheaper than your current
portfolio which, over time, will have significant cost-savings.

Tax There is no tax implications to moving your portfolio.
implication

Your risk profile

Volatility is the risk of your investment decreasing in value over the short term. The best performing
investments generally have the highest volatility.
Your appetite for risk is best described as: Moderate
Below is an explanation of the characteristics of the risks (courtesy of Ninety One).

Portfolio Managment

Diversification Morningstar Portfolios

Obtaining an investment return higher than cash Denhagan Investments has employed Morningstar
deposits will involve taking risks. as the discretionary fund manager (DFM) of choice.
We pair with Morningstar so that you get twice the
One of the ways in which we can minimise service, expertise and ongoing attention. As a team,
investment risk is to have a diversified portfolio. By we provide a solution that taps into each of our
investing in a spread of different asset classes, strengths.
countries and currencies, we lower your overall
exposure to one risk, as assets tend to perform The portfolios Morningstar offers draw on objective,
differently from each other under different market independent research to select the most suitable
conditions. underlying funds. We then combine investment
knowledge with portfolio management experience
The four main asset classes are: to provide investment solutions that put your needs
1. equities or stocks first.
2. bonds
3. cash and cash equivalents, and The result is an organised and empowered client
4. property. with a clear financial plan, clearly defined
expectations and an investment portfolio designed
Each asset class is expected to reflect different risk to fit.
and return characteristics.

Spreading your assets among investment types, Ninety One Platform
styles, and markets is one of the few time-tested
strategies for investors with long-term financial We utilise the systems of Ninety One to view and
goals. administer the various funds and portfolios. Ninety
One are the market leaders in financial software
These structured portfolios provide protection and innovation.
stability, especially in light of the volatile markets we
are currently experiencing and can reasonably You will have access to their systems to view your
expect in future. portfolio in real time, withdraw statement whenever
you choose and print tax certificates.

Ongoing review

Denhagan Investments' financial advisors meet monthly to review the
performance of each portfolio so as to ensure that:

no fraud is perpetrated on the portfolio
the returns are in line with client expectations
immediate action can be taken to rebalance the portfolio when market
conditions or client circumstances change.

FICA and On-Going Administration

Less is more unless you are entering into a financial transaction.

The financial planning industry is very administrative-intensive. Please be
aware that we may request several documents from you so that we
comply with the Financial Intelligence Centre Act, and its amendments, the
Financial Advisory and Intermediary Services Act, and each financial
institution's set of requirements and supporting compliance regulations.

We like trees and will try our best to limit the amount of paperwork but
with investments of this nature, the more protection you have in writing,
the better.

Statements

You will receive monthly and quarterly statements on your portfolio so
that you always have the most up-to-date information.

You are also welcome to register with Ninety One to view your portfolio
live.

Transacting

You are welcome to email or telephone us at any time to discuss your
portfolio or any queries that you have regarding your portfolio or markets
in general. We welcome any queries and will be delighted to engage with
you.

Before any amendments are made to the portfolio, we will explain the
need for the amendment, the costs and taxes payable (if applicable) and
what other alternatives are available. All amendments to your portfolio
will be proposed to you in writing and must be signed by you before
implementation.

Fees

Denhagan's Fees
Denhagan Investments does not charge:

Any upfront fees on any of our portfolios saving you 3,45% from the outset
Any fees to maintain, review or monitor your portfolio.

Financial Advice: Denhagan Investments will charge an ongoing fee of 0.75% (including VAT) per annum to
act as your financial advisors.

Additional costs
Administration of Funds: Ninety One's platform charges a fee for the use of their superior systems.
When utilising their platform, the fund managers' fees are reduced as Ninety One purchases the
funds in bulk.

Investment Management of Funds: The fund managers charge a fee for their expertise in choosing
the funds.

Model Portfolio: Morningstar (the DFM) charges a fee for the use of its portfolio selections. Although
Morningstar charges a fee, they further reduce the cost of the funds as they purchase in bulk.

Enclosed herewith is a quotation from Ninety One with all fees inclusive being 2.42%. You will note that
the fees are transparent and significantly cheaper than what your current portfolio is being charged.

General 011 029 6050
079 319 8373
It must be noted that we can only provide you with a historic
overview of the portfolio and the markets may under or ohagan.co.za
overperform our estimations. By looking at historical data, we
can, to a relative measure of accuracy, predict what the funds, [email protected]
asset classes and fund managers will do and perform in future
however this is not guaranteed.

There is no fixed investment period and additional investments
may be added or withdrawn from the investment at any time.

The portfolio is actively managed by professional asset
managers with a proven track record within organisations of
indisputable reputations.

We will be more than happy to meet with you to discuss the
performance of your portfolio, any concerns or requests you
may have and the economic and market prospects in general.

MOVING FORWARD

Please complete and sign the attached forms for us to send to
Ninety One should you agree with our recommendations.

We are delighted to have you as a client and we hope that we have
a fulfilling and prosperous journey together. Please contact us
should you have any further queries or concerns.

Yours faithfully,

Sharon O'Hagan We would love to hear from you.
Denhagan Investment Services CC

Acceptance

I/We have reviewed and agree with the contents of this Record of Advice. I will
notify Denhagan Investments of any changes to my information, risk tolerance,
personal circumstances, goals or investments.

________________________________________________
AMY TRAPPITT






We look forward to walking this path
with you.